Versabank (VBNK) AI Stock Analysis

• Market Cap: $513.80M
• Dividend Yield: 0.63%
• Average Volume (3M): 14.13K
• Price to Earnings (P/E): 14.2
• Beta (1Y): 1.19
• Revenue Growth: 7.83%
• EPS Growth: -37.41%
• Country: CA
• Employees: 121
• Sector: Financial
• Sector Strength: 72
• Industry: Banks - Regional
• EPS (TTM): 0.26
• Shares Outstanding: 32,518,787
• 10 Day Avg. Volume: 16,017
• 30 Day Avg. Volume: 14,133
• PEG Ratio: -1.10
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -10.36
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $16.75
• Price Target Upside: 5.98% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 76 Outperform
• Price Target: C$18.00 ▲(13.92%Upside)

Versabank demonstrates strong financial health with significant revenue growth and profitability, which is the primary driver of the stock score. The strategic initiatives outlined in the earnings call further support future growth prospects. However, technical indicators and valuation suggest a cautious approach due to mixed signals and potential challenges in maintaining momentum and managing liabilities.

Positive Factors

Digital Banking Model

VersaBank’s digital banking model delivers scalable lending in a risk-mitigated structure.

U.S. Market Entry

EPS growth and rising ROCE benefit from U.S. market entry and continued strength originating RPP loans in Canada.

Negative Factors

Loan Growth

Loan growth of 9.1% Y/Y was the lowest since F1Q21, on weak Canadian fundamentals.

US RPP Rollout

US RPP rollout is moving slower than planned, with discussions with partners slowed by the complexity of the new program.

Versabank Business Overview & Revenue Model

Company Description

VersaBank, a schedule I chartered bank, provides various banking products and services in Canada. The company offers deposit products, such as guaranteed investment certificates, registered retirement savings plans, daily interest savings accounts, and tax-free savings accounts, as well as deposit insurance products. It also provides lending services, including point of sale financing that involves purchasing loan and lease receivables from finance companies operating in various industries; and commercial banking services comprising commercial real estate, public sector/infrastructure financing, condominium financing, and residential mortgages. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

How the Company Makes Money

VersaBank generates revenue primarily through interest income from its lending activities, which include loans to corporations, real estate developers, and personal loans. The bank also earns money from non-interest income, including fees from its digital services and solutions. Additionally, VersaBank has developed proprietary cybersecurity technology and digital banking platforms, which can serve as additional revenue streams through licensing or partnerships. The bank's focus on technology and efficiency allows it to operate with lower costs compared to traditional banks, enhancing its profitability.

Versabank Financial Statement Overview

Summary

Versabank shows strong financial health with impressive revenue growth and profitability. The balance sheet is robust, indicating long-term stability. However, there's a need to manage liabilities growth and ensure consistent cash generation.

Income Statement

Versabank has demonstrated strong revenue growth and profitability, with a significant increase in Total Revenue from prior periods. The TTM (Trailing-Twelve-Months) Gross Profit Margin is robust, and Net Profit Margin has also improved, indicating efficient cost management. However, the volatility in EBIT and EBITDA margins suggests potential fluctuations in operational efficiency.

Balance Sheet

The balance sheet shows a healthy equity buffer with a favorable Debt-to-Equity Ratio, indicating prudent leverage management. The Equity Ratio is stable, reflecting a solid asset base relative to liabilities. Return on Equity (ROE) has improved, showcasing effective use of shareholder funds. However, the potential risk lies in the increasing total liabilities, which may impact future financial flexibility.

Cash Flow

Operating Cash Flow is strong, supporting a healthy Free Cash Flow position. The Free Cash Flow to Net Income Ratio indicates efficient cash conversion from earnings. The Free Cash Flow Growth Rate has been positive, though the Operating Cash Flow to Net Income Ratio shows some volatility, suggesting potential challenges in consistent cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	251.05M	294.40M	108.03M	82.39M	65.36M	54.19M
Gross Profit	110.49M	111.63M	108.64M	82.39M	65.36M	54.19M
EBITDA	47.28M	57.43M	59.43M	34.49M	32.52M	27.90M
Net Income	31.89M	39.75M	42.16M	22.66M	22.38M	19.41M
Balance Sheet
Total Assets	5.05B	4.84B	4.20B	3.27B	2.42B	1.94B
Cash, Cash Equivalents and Short-Term Investments	445.95M	226.21M	132.24M	88.58M	271.52M	257.64M
Total Debt	104.91M	108.58M	110.62M	109.42M	100.39M	16.72M
Total Liabilities	4.52B	4.44B	3.82B	2.92B	2.08B	1.69B
Stockholders Equity	528.31M	399.20M	377.16M	350.68M	332.11M	255.29M
Cash Flow
Free Cash Flow	-50.09M	254.13M	94.36M	-33.23M	-108.32M	139.35M
Operating Cash Flow	-47.14M	272.70M	104.55M	57.46M	-108.31M	139.59M
Investing Cash Flow	-12.09M	-157.58M	-28.14M	-141.61M	-8.44M	9.76M
Financing Cash Flow	224.61M	-23.33M	823.25M	-6.30M	131.40M	-30.85M

Versabank Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 15.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:VBNK, the sentiment is Positive. The current price of 15.8 is above the 20-day moving average (MA) of 15.75, above the 50-day MA of 15.60, and below the 200-day MA of 17.94, indicating a neutral trend. The MACD of 0.09 indicates Positive momentum. The RSI at 53.79 is Neutral, neither overbought nor oversold. The STOCH value of 49.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:VBNK.

Versabank Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VBNK	76 Outperform	$513.80M	14.24	6.79%	0.63%	7.83%	-37.41%
Sector *	68 Neutral	$17.10B	11.44	9.70%	3.58%	11.11%	-4.78%
LRCDF	―	$1.01B	10.65	5.38%	0.26%	―	―
MKP	74 Outperform	C$796.46M	11.01	11.99%	7.89%	19.71%	-15.59%
TF	74 Outperform	C$646.30M	13.92	6.74%	8.83%	-8.68%	-25.42%
AI	68 Neutral	C$559.93M	11.28	9.47%	7.77%	-1.56%	-9.70%
FC	67 Neutral	C$449.65M	12.02	8.89%	8.34%	-4.56%	0.77%

Versabank Corporate Events

VersaBank Q1 2025 Results Highlight Strong Business Model and US Expansion

VersaBank reported its first quarter 2025 financial results, showcasing the strength of its business model as it expands its RPP solution in the US market. The bank saw a 48% increase in net income compared to the previous quarter, despite a 4% decrease in total revenue from the same period last year. Significant improvements were noted in key financial metrics, including a 33% rise in return on average common equity and a 31% increase in the leverage ratio, indicating robust financial health and strategic growth.

VersaBank Announces Quarterly Dividend for Shareholders

VersaBank has declared a cash dividend of CAD $0.025 per common share for the quarter ending April 30, 2025. This announcement underscores the bank’s commitment to providing shareholder value and reflects its strong financial position, bolstered by its innovative business model and recent market expansions.